EUR/USD To Break Above 1.3850?

After the Federal Open Market Committee released its statement yesterday EUR/USD remained on its positions until today's early European session, which brought Euro to a rally behind the crucial 1.3800 mark. Will EUR/USD stay above it? Probably. Will EUR/USD break the 1.3850 resistance barrier to soar high to 1.4000 level? Less probably. Let's look on the fundamentals.
Yesterday a labor productivity data for the industrial sector came out lower than expected by the majority of traders - 1.8% increase, instead of 2.1%. Meanwhile, consumer credit for June this year increased by 13.2 billion dollars, while analysts were expecting 6 billion dollars increase.
FOMC released another 'inflation-concerned' statement, leaving the interest rates at 5.25% level. While the main concern for the FOMC remains the inflation, it started to get nervous because of the risks connected with the economical growth and especially housing crisis.
Today data on business wholesale inventories came out slightly better than predicted - increased by 0.5% instead of 0.4%, while the crude oil inventories again dropped down significantly - by 4.1 million barrels.
Despite of FOMC being more inflation orientated, the economical growth correction will probably make them to decrease the interest rates at least once (or at least stop increasing it even more). Currently, housing data and oil inventories (taking in mind current oil prices) don't look very promising for the U.S.

Carnival of Forex Trading - July 1, 2007

Welcome to the July 1, 2007 edition of Carnival of Forex trading.

Jimmy Atkinson presents How Does Terrorism Affect Your Trading? posted at Forex Blog.

George Courtney jr presents Go Global by Investing in Foreign Currencies posted at The Authentic Bartender Blog.

Mark25 presents Forex Exchange Rate - How Does It Get Calculated? posted at HotStrategies.com.

Ralph Morgan presents Enough Wealth: Adventures in Day Trading - 12 posted at Enough Wealth.

Bryan Moore presents How to Create Synthetic FOREX Currency Pairs posted at TheFinancialWhiz.Com, saying, "This article explains the principles behind creating synthetic Forex currency pairs. The problem a lot of traders run into is that they sometimes cannot directly trade a particular currency pair from their broker, this explains how you can dissect two currency pairs to create the one you need."

That concludes this edition. Submit your blog article to the next edition of Carnival of Forex trading using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Forex Trading Using the Long-Term Charts

When it comes to Forex trading it is usually associated intraday trading or more rarely - intraweek trading. This is caused mainly by the high volatility of major currency pairs which makes them potentially profitable in the small amounts of time, while making it too risky in longer terms. Second reason for the short-term Forex trading being more popular is a high leverage margin accounts - 1:100 or even higher – this increases single position risk and profit making it deadly risky in a long term.

Long-term trading in Forex can be defined as deliberate maintaining of open positions for more than a week. Under one week term is still considered a short-term for Forex – position lives through just a few different news releases and is not caused by long-term forecasting. Whereas position which is kept open for several weeks usually lives through some news releases on the same topic (but with different) and thus requires some long-term forecasting and technical analysis on daily/weekly charts.

Success in Forex trading (like in any other financial trading) depends greatly on trader’s psychology and emotions. Some traders are comfortable with fast and exciting (if trading can be exciting) trading style when positions are open and closed within minutes. Others prefer keeping their positions open for several hours – watch them rise or fall and have some time to react to the market moves. Trying to trade in the time periods that don’t suit your character type won’t bring you any profit. To trade successfully one must be emotionally integral and calm. If trader is uncomfortable with intraday or daily trading he needs to try something different. Long-term Forex trading is good for:

1. Traders that don’t have time to sit in front of their terminal for the whole day.
2. Traders that like to spend a lot of time in fundamental or technical analysis.
3. Those that can spend more than one day when it comes to the actual trading decision.

If you feel that you fall into one of the above categories of Forex traders I suggest you at least to try long-term trading. Perhaps, it will dramatically improve your trading results.
The best charts for the long-term trading in Forex market are daily and weekly charts (and other charts of bigger periods). Personally I prefer using a weekly chart for EUR/USD pair, since technical analysis patterns can be clearly seen on such chart (unlike short-term charts that often behave against all possible predictions). Determining a trend or breakout is not hard on the long-term charts usually. But even if a trader fails to recognize a pattern and opens a wrong position he will have many days to close it, and often he will have a chance to close even a bad position with a small profit. Using fundamental analysis in long-term Forex trading isn’t hard too. Trader just needs to analyze general trades in central banks’ interest rates decisions and act according to possible carry trade trends. Long-term trader also shouldn’t forget about general global trends – like oil prices, commodities, political situation and others. Maintaining stop-losses is very important and especially if trader uses high leverage – stop-loss shouldn’t be to far away from the open price. Trailing stop is good, but it should be manual, not automatic. Stop loss moving should be based on the Forex market behavior. Position target should be set according to the trader’s plan – when analyzing the long-term chart it is really not difficult to determine the most probable targets for the currency pair to land.

So, if you think that short-term Forex trading doesn’t posses a good potential for you as a Forex trader – try long-term trading. In Forex it is still good as it is with stocks. Just don’t forget that you are trading with leverage, that main trends are caused by central banks’ interest rates decisions and that stop-loss/target-profit should be placed according to charts technical analysis.

High Street Networking - On-line Forex Broker since 1999

One of the oldest on-line Forex brokers present on the current market - High Street Networking (ForexHSI). It started its website back in 1999 and still remains a meaningful player on the market of retail Forex services. High Street Networking supports deposits via WebMoney and has a very good browser based trading platform available to its clients. Despite of this broker being unregistered with any financial controlling organization, working with such an old and established on-line company is less risky than with one of the money new Forex brokers which are not rare nowadays.

EUR/USD Bearish after Fundamental News

EUR/USD broke through 1.3400 today on Forex market - showing a new 7-week low. Good macroeconomic data from U.S. was the reason for this break-through. Nonfarm payrolls - a major employment indicator of the U.S. economy - increased by 157,000 in May (22 thousands more than expected), while ISM Index - reported an increase by 0.3% up to 55.0% (against 54.0% expected). ISM Index means a lot in the U.S. economy because it describes its most powerful industries, and greatly influences FOMC rate decisions. Now it is quite possible to see an increase in U.S. interest rates by 0.25% this Fall, in my opinion.

2 New E-Books about Forex Trader's Psychology

Now you can download two more excellent Forex e-books about a role of the traders' psychology in their success or failure (which is without a doubt a more often case) . These e-books are not very big or complicated, just an hour of interesting and useful Forex reading:

• 25 Rules Of Forex Trading Discipline - as the title suggest, a set of rules that are necessary to be followed to be a successful Forex trader.
• Stop Losses Are For Sissies - there is a sarcasm in the title of this e-book, really :-).

3 New Forex Articles

Three new articles covering two different Forex trading aspects have been added to the Forex article section today. These aspects are getting Forex education and Forex technical analysis. All three articles are written by the same author - Sacha Tarkovsky and are very professional pieces of Forex information:
FOREX Education - Thinking Of Buying FOREX Advice? Read This First - about how to stop yourself from buying something that will not help you become a good Forex trader at all and how to avoid losing precious time and money on wrong education courses.
Gann Angles - A Unique Powerful Tool For Trading Profits - Gann Angles as one of the prominent technical analysis system and its application in the Forex trading.
Fibonacci Numbers - Trade For Huge Profits With This Unique Tool! - Fibonacci numbers and Fibonacci retracement levels should be well known to all technical Forex traders - they are great tool to determine the important market levels in Forex.